History of Volkswagen
By: Good2GoPublished: August 29, 2016
Today, Volkswagen is known as the largest automaker in Europe. As of 2006, it’s even knocked out Ford to join Toyota and General Motors as the top three automakers in the world1. However, the quirky and loveable company we know today was established in 1937 by the German Labor Front, the National Socialist trade union organization. Volkswagen literally translates from German to “the people’s car.” At the time, few German families owned cars, so it was Hitler’s vision to mass produce an affordable, speedy vehicle. Hitler worked closely with Ferdinand Porsche to help bring his idea to life.
Hitler’s idea was to produce a car that could support two adults and three children, travel at 100 km/h (62mph), and cost no more than 1,000 Reich marks (about $140 at the time). In 1938 at a Nazi rally, Hitler declared “It is for the broad masses that this car has been built. Its purpose is to answer their transportation needs, and it is intended to give them joy.” Soon after, the KdF (Kraft-durch-Freude)-Wagen, which translates to the “Strength-Through-Joy” car, came to life and made its debut appearance at the Berlin Motor Show in 1939. The design was not unlike the Beetle, with its small, aerodynamic shape, rear engine, and torsion bar suspension.
When World War II began, Volkswagen ceased production and the German Labor Front began using prisoners from concentration camps to build vehicles for the German army. By the end of the war, the factory was destroyed. With the factory under British military control, the Allies saw an opportunity to help regenerate the German auto industry. Within a year, the car and company were renamed Volkswagen and they began producing 1,000 vehicles a month.
Volkswagen paid Porsche a licensing fee to use Ferdinand Porsche’s Beetle design, which would keep the two companies linked for decades. By 1955, sales of the Beetle reached 1 million. Volkswagen was under German control once again, after being offered by the British Army to representatives from the US, Australian, British, and French motor industries, but rejected by all.
In 1964, Volkswagen bought the Auto Union, who owned the Audi brand, which would eventually be merged with NSU Motorenwerke in 1969 to create the Audi firm and used as a luxury vehicle brand. With Audi’s advanced technological expertise and demand for Volkswagen’s original air-cooled models decreasing, Volkswagen created a new generation of vehicles in 1973 with front-wheel drive and water-cooled engines. Some of these cars, like the Passat and Golf, are still available today.
During the next 30 years, Volkswagen would continue to expand and acquire new brands, a few of the most notable being Bentley, Bugatti, and Lamborghini. All the while, Porsche is continuing to increase its stake in Volkswagen from 5% to 20%, and again in 2007 to 30.9%. Porsche nearly fell bankrupt after tying to acquire Volkswagen, a company significantly larger than itself, in 2008.
Fast forward to present time and Volkswagen is one of the biggest firms in the world, with its products being sold in 153 countries around the world and factories in 31 of those. After a rocky start in Nazi Germany, Volkswagen overcame multiple obstacles and nearly avoided scandal until 2015, when the Environmental Protection Agency discovered Volkswagen was cheating emissions tests in the US. Volkswagen admitted that 11 million of its vehicles are equipped with software used to cheat on emissions tests.
As a part of the settlement, Volkswagen has set aside more than $10 billion to buy back the affected vehicles and compensate consumers for new cars. In addition to losing about $17.9 billion for costs related to the scandal, its chief executive, Martin Winterkorn, and the head of American operations have stepped down. The company is still facing legal battles with civil and criminal investigations in the US and Germany and should expect to receive hefty fines, as well. The investigation is ongoing, and the future of Volkswagen is unclear at the present time.
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1World Motor Vehicle Production: World Ranking of Manufacturers Year 2006. OICA.